Niner Files for Chapter 11 Bankruptcy with Pending Sale to Colorado Investment Group

Yesterday, November 29, Niner announced in a BRAIN article that it had filed for protection under chapter 11 bankruptcy rules as a way to streamline the sale and transition of Niner to a Colorado investment consortium. Under Chapter 11, the court will package Niner's assets and debt, which are expected to be sold to Columbia Basin Partners as early as January, 2018.

Niner posted assets of 9.8 million and liabilities at 7.9 million, which supports Co-Founder and major shareholder Chris Sugai's statement that Niner was solvent, but lacked the capital to invest in the marketing and research and development needed to remain competitive. Reportedly, Sugai had been seeking an outside investor to facilitate that, which led to negotiations with Columbia Basin Partners.

In an interview Wednesday, company co-founder and president Chris Sugai said the Chapter 11 filing was the most efficient way to sell the company to the group, which is called Columbia Basin Partners.—BRAIN 11/29/17

Niner Co-founder Chris Sugai.

Niner announced earlier this month, also in BRAIN, that the first name in 29-inch wheels would be sold to a Colorado based investment group made up of Niner enthusiasts who both understand and support the company's mission statement. "Our capable team remains intact." Said Chris Sugai. "That's important. Everyone here will continue to support Niner's mission of supporting trails everywhere, of building the riding stoke, and of creating incredible cycling products for riders who love to hit the dirt." Sugai said he will continue to play an active role in the day to day affairs of the company.

Niner's RIP-9 RDO was its first step into the all-mountain/enduro category.

What Does this Mean to Niner Fans?

Sugai told PB in a phone conversation today that, during the reorganization period, Niner's staff will be working as usual, shipping orders, supporting customers and taking care of warranty issues. Niner will also be fulfilling its commitments to dealers here and abroad. Sugai anticipates the hand-off to the new owners will be seamless. Perhaps more important to Sugai, was that his 31 employees will remain with Niner. Chis said that he reacted to Niner's situation early on to help ensure that the transition could take place without devastating layoffs.

Niner has been more than a bike brand. Everyone rides, and under Sugai's leadership, they have been a strong supporter of IMBA and of a number of events, as a way of re-investing in the sport. We are told that Niner's new owners are avid riders as well. If all goes to plan, the brand will have a shot at returning to strength. We wish them well.

322 Comments

When I co-founded Niner back in 2005 it was due to my passion for bikes. That passion has only grown stronger through the years. It’s a blast, and has bee, learning so much about this industry and meeting so many passionate people who share my love of cycling. In recent years, Niner’s growth has slowed. We need to be able to grow to continue to be innovative and make great, reliable products. So, we have found a local Colorado group of businessmen, who are passionate about cycling, who call themselves Columbia Basin Partners and they have agreed to purchase the company. Through the rumor mill or misinterpreting how Chapter 11 bankruptcy works, you may have heard that we are going out of business. This is simply not true. In order to make the sale happen, we have had to file for Chapter 11 bankruptcy which allows us to restructure our finances. We will emerge from Chapter 11 in roughly 60 day, on January 30, 2018 on more solid financial footing. In the meantime, we are well-funded and able to meet our financial obligations. Business is as usual around the offices. We are shipping bikes, helping riders with concerns, including warranty concerns, and all of our regular daily duties that makes Niner tick. Our team remains intact and is doing what we always do – working to support our riders and our local bike shops in whichever ways they need. My main goal, and our goal as a company, is to put big grins on the faces of mountain bikers and sure we are able to continue to support mountain biking. The 31 team members I have the pleasure of working with each day are avid riders. And we all believe in the power of mountain biking, the importance of supporting trail access and the ability for mountain biking to have an incredible impact on people’s lives. We’re in this for the long haul and soon will have the ability to innovate more and continue to create incredible products. And as always, we’ll continue to push for trail access so riders have great places to ride.

@carym: We continue to honor our warranties today and will continue to do so moving forward as we exit from Ch. 11. Also, due to the fact that this is a court matter, we cannot comment on our debts. As a company, however, we have always handled ourselves in an ethical manner.

By which you mean you are screwing over your suppliers, so you can abscond your responsibilities. Classy... Hope the small suppliers and mum and dad businesses you owe money to aren't getting screwed over too hard

I think thats great Chris and fair play to you - I hope it continues. I just feel a bit sour about the fact that you say you're meeting your financial obligations; why then do a Chapter 11?Best of luck.

While we are not fans of the overly committed brand, we do understand what it's like to be an owner in an extremely difficult position. You take it to bed every night, you loose sleep, you get sick, you battle negative thoughts, and you constantly think about the employees, partners, and customers who you care very much for and feel deeply committed to. For most, it's enough to tuck tail and quit. Many wouldn't have the wherewithal to sit here and manage the message, publically. And most are not quick enough to pull the trigger when the company is still in the black to save those who stand to loose the most if it goes under. Giving up control is something we as business owners imagine doing as a retirement or planned exit strategy. This scenario is often one of our greatest fears. To face it with dignity, grace and positive energy takes everything we have, deep down inside. We wish you and the team the best. Nice work saving those jobs, finding a lifeline, and still being there for those who are flying the flag. We wish you guys a full recovery and prosperous 2018 and beyond.

I have a small business as well. Chapter 11: screwing over your suppliers, so you can abscond your responsibilities. You spent their money. Now you don't have to pay them. Retain as much ownership interest as possible for the "BIG SALE". Sugai, why don't you be transparent and let us know who's $1,900,000 you're not paying in the sale of the company. I know several people who are genuinely crushed by this decision.

While Chris posting on here is transparent don't be fooled - it's damage control. He has the "we're still in business" pom-poms out. Chris is posting the same message, almost verbatim, on other sites as well. It's in Chris' best interest as majority shareholder to ensure the business and brand image stays afloat through Ch11 and ultimately sale - even post-sale for that matter since it's been indicated he will stay on-board.

And while saving the 31 cyclist employee jobs while continuing to warranty bikes is an admirable statement, maybe those and all other business aspects should have been considered and dealt with while Chris and/or his partners ran the business into the ground. And yet, Chris hasn't claimed any responsibility for the mismanagement that led to this situation in any of his comments that I've read. That should be his starting point...

There are legit cases where Chapter 11 could help crystallize a debt which a new owner would insist on before completing a sale. Take for example a loan taken from a friend in the earliest years of the business that hasn’t been repaid and only had poor or non-existent paperwork backing it. Chapter 11 would set a definitive value on it. So as others have noted, yes, the process could be used to screw suppliers and other debt holders - particularly those with weak documentation (friends, small businesses, those with too much trust) it’s not a guarantee it will. And the court will have final approval, so should in theory back all legitimate debt holders. Court docs will tell in time.

I love Niner bikes and would one day like to own another one (love those gravel bikes!). Your transparency and honesty in the situation is refreshing. Working in the corporate world myself, I know this is never easy.

Not to be a douche but maybe if all the companies in this industry stopped trying to push $8,000-10,000 carbon bikes draped in carbon with carbon everything sprinkled all over it onto everyone you might have seen more growth. I know kids in harlem with more bike control and skills than you would even believe and they find their bikes in the dumpster. This $10k bike nonsense is ridiculous I dont care how much "passion" anyone says they have. I can buy a used DH, Hardtail, Dirtbike and car for $10k and still have money left over to take your mom out for a nice dinner.

All of the companies in this industry need to take a hard look at themselves and admit theyre ripping off their customers - this goes for components, apparel, protection, footwear, everything - and if it doesn't stop, it's only a matter of time before you're all filing chapter 11.

You are right, but isn't it simply called "captalism"? The fact is that the companies are pushing those ridiculously pricey and unnecessary crap because there are dentists out there who can afford it. Period.

Come to Oz where materialism is rife, everyone and their kids are pootling around crappy imba graded soul sapping 1m wide hardpack toboggan runs on full carbon everything, max wank factor bikes.
Most of the action that takes place is in the form of gasbagging in the carpark and the vast majority of riders are using too much travel for any of the local trails and can't ride anything even remotely technical.
Unfortunately mtb has changed from a niche sport where people rode xc to go on an adventure and then dug a few jumps in their local woods another day to just being a flouro-clad brand whore fashion parade from tradies and dentists. Personally I blame the advent of the word 'enduro' and changes in wheel size for everything lol

its called progression. 1k mtbs are better than theyve ever been due to trickle down technology from top end mtbs. some people think 250k for a rolls royce is rediculous, you could buy a house, normal car, motorbike etc for that and still have change, yet people still buy them. the reason bikes have got more expensive at the top end is due to increasing performance at the top end, were still in a developing sport, and as stuff gets better and more advanced, itll cost more. its only like wrx cars costing 500k, you can get a perfectly satisfactory car for 20k brand new, but it just doesnt have the performance of those high end versions. if you dont want a 10k mtb, dont buy one, just like most people dont buy a rolls royce or ferrari, and a 1k mtb will do just fine, like a 25k car does most people just fine.

There are riders here in Nottingham who’re hitting dirt jumps on decathlon bikes with their man bags on and a joint hanging out their mouth, sure they’re a bit ‘different’ but they actually have some skill and serious potential to become talented riders. These are mostly kids who’re from less than priveledged backgrounds for whom riding bikes is not only a healthy outlet but may even represent a career and/ or future opportunity in one way or another. There is more talent amongst them than any of the riders I see out on the trails aboard their carbon wonder bikes. Yet if I myself can’t afford what is now a middle of the road mtb how’re these kids gonna do it without getting themselves into debt? I think the high prices and the culture shift towards elitism in mountain biking prevents a lot of this talent from realising full potential. I take the point about trickle down tech and capitalism and don’t really have a strong come back for that at the point. All I can say is that from my point of view mountain biking used to be more about getting out in the nature, seeing who has the most skills and some classic one-upmanship and less about how much money’s in your wallet, how much of it you spent on your bike, how much carbon you got and how big your cassette is. It has become too materialistic, we’re talking about how to make ourselves look faster in pictures ffs (photogs please forgive me I fully appreciate there is a legit and positive side to that argument) next it will be about how to get that ‘pro look’ out on the trail or some crap. I dunno how I got into all this on this thread but I just had to agree with what @ctd07 said. Must try and be more positive here, apologies. New Years resolution.

@inked-up-metalhead: It is the absurd price mark up in the bike market combined with regularly changing standards that make it different from other industries. From the cost of manufacture to the point of retail, bikes are selling like leonardo da Vinci paintings.

regularly changing standards? at least there are standards, try fitting a toyota gearbox in a audi. and really, in the last 12 years (how long ive been riding) theres been a new wheelsize, 2 dropout changes (though 142 is the same size hub so noone bitched because it was infinitely better than qr or 135x12) and a handlebar diameter. all the old stuff is still made, ive recently bought brand new 26 inch wheels (gasp).

As for cost of manufacter to retail price, cars are even worse yet most people happily pay for new cars, which are outdated as soon as you leave the showroom, because every model year gets at least something better than the one before, to entice people to buy it. The fact is wages need paying, overheads need paying, shareholders need placating, bike shops need their cut, money needs setting aside for warranty issues. Again, go buy a 1k bike, itll be as good as a 3k bike from when i started riding, and be envious of the dentists on their 10k bikes.

If I hear the word progression or innovation one more time....Its a bicycle! 1800s technology. 1800s to 2017 compare the two bikes and you'll see how sloooooooooooooooooooooooooooooow "progression" really has been. Airplanes went from sticks and fabric (wright bros) to 747s in less time than bikes evolved. I wonder why bikes have been slow at evolving...oh they are simply bicycles. Everything is rider preference. Geometry and feel fluctuates from rider to rider. Changing a geometry isn't "innovation" that's tailor fitting. So ramming the price up because a head tube changed and labeling it "progression" is screwing over the consumer. The only thing that's really progressed is suspension. I'll admit shocks and forks seem reasonably priced and evolved rapidly.

@TBagTantalizer: uhuh, my 2002 orange patriot lt size small has almost the same geo as my 2015 giant trance size medium, the biggest geometry difference is only by 15mm (headtube angle was actually slacker on the orange with longer forks on), a medium patriot would probably be almost the same. 15 years difference and honestly the coil vanilla rc shock that came on the old bike was infinitely better in every way than the float air on my trance.

This is an example as to how marketing spiel has blinded people into thinking bikes have made much change. Wheelsize difference has its positives and negatives, the best changes I can really see in 15 years of the bikes I've owned is in bar width, going tubeless, reliability of brakes and dropper posts. Nice to see shorter stems being specced on newer bikes, but I've always swapped them out for a 50mm anyway.

@inked-up-metalhead: I was referring to your standards. Do you want the gearbox in a toyota corolla to be put in a audi R8? Or a 3 cylinder 80 hp engine hauling a 10 ton load? etc.

There are plenty of aftermarket companies that supply parts to fit specific cars etc. Same in the bike industry. But you can't go making standards across brands/manufacturers like that in the automotive world.

Just like we don't run road tires on a mtb. Or 20" wheels on an enduro bike.....

A better argument, as its always been made is the dirt bike comparison. I can buy a brand new 250cc dirt bike for 10k that has infinitely more moving parts etc.

@Airfreak: so moving parts = worth more? thats wierd logic, and no, but why doesnt every supercar use the same running gear? again, theres pretty much no 'standards' on motor vehicles and thats not a problem, if you get a new car you buy stuff to fit that instead of your old model, but if you have to do that with bikes suddenly its an issue? i just dont get it.

and a 10k dirt bike in relative levels of performance is like a 200 quid mtb, i.e. right at the bottom end. its like saying for your 250k rolls royce you can buy a plane. its a cessna, not a f16, but you can buy it for the same money as a car so surely its better value because its more complex? not at all. compare the costs at the top end of other areas and mtbs are still cheap to some degree, cars can cost millions, motorbikes half a mil, planes billions, ships 10s of billions. yes you can get a much cheaper one of each, but you can get a much cheaper mtb. again, comparing the top of one area to the bottom of another the other will always look favourable, otherwise you wouldnt be making the comparison. how about air rifles? can spend 2500 on an air rifle with about 3 moving parts, mtbs are suddenly looking cheap. anyone can make comparisons with anything, but unless you compare the same relative level (top end, mid range, low end etc) its a rediculous argument to use because your not comparing like for like.

@inked-up-metalhead: We could argue this all day and point out all the differences and reasons for having standards and not having standards. I am not going to refute that. Putting standards in place pigeonholes developers (and quite possibly you could say that about biking). But these standards I wouldn't really call standards across an industry. They are changes made to have the customer believe its better. No one had to go to 29er or 27.5. No one has to go to 12x142 or boost etc. They only thing that is dictating that is OEM's are the driving force of that and eliminating those options. And just maybe there is truth in some of it. ( the axle standards boost stuff I think is baloney)

There still aren't standards for der hangers on each frame, thread size for the axle, why don't we have one seat post thickness? Countless times I've had to buy a new seat post because I bought a new frame. yada yada yada. Regarding the why doesn't every supercar use the same running gear? Why then do some people use 40t chain rings and some 32? Why don't I have a chain to fit both?!?!?! How come my sram 94bcd won't work on my shimano 104bcd crank?

And back to dirt bikes, that 10k dirt bike you'll see every person not pro riding it and probably not even getting half of its capabilities. You can say the same thing about the 10k mtb bike. However like you said there are crazily more expensive dirt bikes after being modded. What can you do to that 10k mtb bike. Change the color? Paint it gold? And I know, now your going to say then thats a bargain. The scale from a 1k dirt bike to 500k dirt bike is a lot more than a 200 mtb and 10k mtb. (A 500 times difference vs 50) Moving parts aren't "worth more" but the development costs more, assembly costs more, shipping costs more etc etc.

I could go on and on about at least war planes and how much they cost because of the government etc. Actually there are pry tons of standards in planes and thats why they cost so much. Will the wing work on a f16 and put it on a f14? Probably not. But there were still standards. Maybe thats why mtb cost so much.

"comparing the top of one area to the bottom of another the other will always look favourable, otherwise you wouldnt be making the comparison" Exactly and that is why I said comparing to cars is wrong. Completely different area.

I was in a parking lot once, waiting for a group that I was shuttling with. In this shopping parking lot at 8am tons of people were arriving in RV's and gearing up with food etc. to go to a football game. I was like damn they are spending tons of money on that RV to go tailgating, hundreds for a football ticket etc. But then I thought shit I spent 5k on my mtb when people pry think thats crazy. At the end of things its our hobby. Watching football is someone else. Just enjoy it. For 5k and the enjoyment I get out of mountain biking is pretty awesome.

I don't know where the hell I was going with this. Its raining and I can't go ride. Anyways carry on.

@ctd07: Meh, my friends and I spent just as much time gasbagging back in the day when we all rode alloy hardtails because suspension hadn't yet filtered past niche DH bikes, and carbon wasn't even considered fit for road bikes. Hell, we could even gasbag while riding up hills in those days, as well as in the carpark.Yes, a lot of trails have been dumbed down, but despite expanding waistlines and family commitments, we ride our full carbon everything max wank factor bikes way faster down much steeper, harder lines that we would have thought possible for mortals like us 15 years ago.Yes, the sport has become much more accessible, which has removed some of the adventure on local tracks. But the improvements to bikes have also enabled progression which allows us to have new adventures.

So what you are really doing is settling with creditors for pennies on the dollar to make the books better in a sale after the fact. So your Taiwanese frame builder, Rockshox, SRAM, Fox, Shimano and others are taking the hit?

THIS. "Requires a law degree"? Total BS. A simple understanding of finance would suffice. This move will remove virtually all liabilities of their balance sheet and shafts their creditors. Yes companies do this all the time, bit I personally find it disgusting and irresponsible and will never buy a Niner bike because of this.

@tcmtnbikr: This is not a Chapter 7 bankruptcy; it is filed under Chapter 11. The difference matters because one, Chapter 7, leads to liquidation of assets and may have the effect of leaving all of the creditors holding the bag. The other, Chapter 11, is a reorganization where the debtor formulates a plan to continue operations and to pay back its creditors without a discharge of the debt. We don't know the specifics of the plan yet, but the likely result is that Niner will simply try to use its Chapter 11 bankruptcy to renegotiate the terms of repayment with its creditors.

That’s a dumb response. That’s like saying you wouldn’t buy a certain vehicle because blah blah....they did something that has absolutely NO EFFECT ON YOU but it’s your opinion, your entitled to it, even if it is weird. @thorsbane:

@tblore: I'm probably overreacting tblore. I just have always had that mindset that screwing others over is deplorable. They have enough assets to pay off their current liabilities, if they really wanted to do the right thing.

@thorsbane: While we could shut down and liquidate our current assets. It would mean the loss of 31 cyclists jobs that work for Niner, loss of all warranty coverage for all current riders, loss of inventory value for our Local Bike Shops and International Dist, our business is currently grossing 15 million dollars a year and we support a whole host of other cycling related jobs and advocacy over the years. Taking on the investment and growing the company is a win in the right column.

I think you are premature on commenting on how we treat our creditors. We have always carried ourselves in an ethical manner. When a company enters bankruptcy everything is governed by the courts and all plans must be approved by the courts and done with the best interest of the creditors in mind.

@TheOriginalTwoTone: actual lawyer here. Before you go attacking people and contending that they don't have facts, if debts won't be restructured and reduced somehow, why file Chapter 11 at all?

Chapter 11, though not a liquidation, is nevertheless a reorganization. Typically, that means that either principal is reduced, interest rates are reduced, or payment terms are adjusted for the benefit of the debtor. Of course, the degree to which a debt is reduced will vary whether the creditor is secured or unsecured.

If you would like to continue to debate this, I am happy to provide citations to statutes as well as examples of chapter 11 plans that have been approved by courts.

@NinerBikes: if your purchaser has the money to buy you, they would have had the money to do what you say too, step into your payment terms, etc. without using Chapter 11. Using chapter 11, however, will without a doubt reduced or modified your debts in a way not in favor of the terms your creditors signed up for. To me, the only way this doesn’t look like a step in the terms of purchase initiated by the buyer, is if you were to tell us this would be Niner’s plan without a buyer.

That said, perhaps we should be blaming the buyer here.

That all said, if this was the plan presented to me to save my company and the creditors get something instead of nothing and jobs stay in place, I’d probably do the same thing. I think the rest of the PB community needs to put themselves in the shoes of man that founded a company a bit more before we criticize.

@NinerBikes: Thanks for the response and please accept my apology for the harshness of some of my comments, which were largely based on a gut reaction from your initial post and some assumptions on my part. If it is true that you are doing your utmost to treat your creditors fairly as you proceed through bankruptcy then I have to take it on faith that this was truly the only option and that you guys are doing your best to balance out your need to survive with the needs of your creditors to receive what is due them, to the extent possible under bankruptcy laws.

@thorsbane: Thanks, it has been a tough week for all of us at Niner. I hope others will follow up after Jan 30, 2018 when we emerge from Chapter 11 to see how things went down vs speculating with little information. But that is life on the internets. Hope we meet on the trails one day.

@dtax: Why would you "blame" anyone? Unfortunately when a company takes on too much debt, this can happen. The beauty of a Chapter 11, is that Niner will continue to operate, and as an ongoing entity, not only is it the right thing to do, but the smart thing to do is ensure solid relations with critical suppliers, customers, bike shops, etc. Therefore this will only be good for the rider, going forward, Niner will have the wherewithal to invest in products.

@carym: I know that unless sealed, filings in court are public through Pacer and elsewhere. I don't care to do it. I was only pointing out the irony of the internet lawyer (@TheOriginalTwoTone) calling out other "internet lawyers."

Granted, Chapter 11 is almost always better for creditors than Chapter 7, because at least the creditors get *something*. But @TheOriginalTwoTone probably shouldn't criticize people when he/she lacks sufficient background to do so.

That is not necessarily the case. I was in the management team for a business where we had to do this in order to facilitate a purchase and saviour of the company. All suppliers got paid, some jobs were lost but we also saved a load and the only people who lost money were the owners and we were in a worse state than niner financially. Seems to me like a clever and brave move to keep the company afloat and sell it while it still has some value. I honestly hope it has meant Sugai has walked away with a pocket full of for all the previously unpaid hard work and commitment that goes into setting up a business.

I work for one of Niners Taiwan vendors and it's business as usual. We have PO's coming in all the time and working on many new projects. They ALWAYS pay on time for years now and one of our better customers. It pains me to see people making comments saying Niner is "disgusting and irresponsible." If you read the comment by Chris he says that nothing has changed and they are selling bikes no problem. He's using CH11 as the quickest way to reorganize to sell the company fast. If they were "shafting" vendors then they wouldn't be selling bike since they wouldn't be able to get their current frames made... and frames are being made as we speak w/ zero business issues. I've known Chris for many years and he's a smart, super nice guy and I enjoy working with his excellent staff and catching up with him and all the major bike shows. It pains me to see people talking out of their ass creating bad will to such a professional customer of ours. Good luck Chris and the rest of the Niner family. Enjoy the future success you're going to have with the new investor!

The "internet lawyers" stating that creditors will be screwed are right. Maybe not as screwed as in a Chapter 7 filing, but screwed nevertheless. So again, calling people morons because they allegedly don't have "facts" is hilariously ironic. Please review my comments above, or do a quick search on the Google Machine for how Chapter 11 works (special hint in case you have missed it - credtors DO get screwed in Chapter 11 too).

Since you were able to find and post an irrelevant article, presumably you are familiar with Google. Or, just keep peddling nonsense and alternative facts. Sadly, it works for our "esteemed" President.

@InspectorSnatchIt: On the contrary. I know them very well. read through and you will educate yourself. Chris Sugai's flowery comments would be very familiar on CNN,MSNBC and others. It's called fake news.

@drboudreaux: that's a silly/shortsighted way to look at it. Does it benefit suppliers more to get a full settlement of existing debt, followed by the loss of ALL the annual business they do with Niner when the company goes under? Or would they rather renegotiate existing debts and take a loss in the present, while ensuring revenue from Niner for the forseeable future?

Yes, they might get "screwed" to a degree in the near term, but I'd reserve judgement unless you actually know the situation. If I was a vendor and Niner was a significant chunk of my business, the last thing I'd want was for them to go under - that doesn't benefit them or me. It's a little weird that they can't sell to investors as-is if they're as solvent as they say, but business is complicated.

@TheOriginalTwoTone: I never suggested that I know what the settlement is. I would love to know where I said that. Once the proposed plan is filed, I can report back if you'd like.

All that I have said (multiple times) was directly related to rebutting the argument that Chapter 11 is somehow not bad for creditors because it is a reorg instead of a discharge. Chapter 11 is still bad for creditors, but they at least get something.

In fact, while we are discussing US bankruptcy law, even creditors in Chapter 7 can get something, depending on what their status is. For example, a secured creditor is in a better place than an unsecured creditor. Secured creditors' debts are "prioritized" by the underlying asset. The bank that holds the note on your car is a secured creditor. If you declared Chapter 7 bankruptcy, the bank would have priority over your car (if you weren't allowed to keep it). Your credit card company's debt is unsecured, meaning it would only get paid if there was money left over after all exemptions and secured creditors were paid.

So, using that example, let's say that when someone files Chapter 7 they owe $10k in credit card debt and own a car valued at $20k. The loan on the car is $18k. Those are the only assets and debts they have. Excluding statutory exemptions, etc. the car would be sold for $20k, the bank would get $18k, and the credit card company would get $2k. The remaining credit card debt would be discharged. This is why credit card companies charge higher interest rates than banks on car loans (generally). This is an oversimplified example - but it is an example nonetheless. It should also not be considered legal advice.

Never thought I would be discussing (in hypothetical and oversimplified terms) US bankruptcy laws on pinkbike.

I think some of you need to read up on what Chapter 11 means. The reason they are doing it before the sale is likely to restructure the liabilities, so that the debt payments are sustainable for the new owners going forward. Otherwise why would they buy the company?

This is also not a situation where creditors just get f*cked. When a company enters bankruptcy everything is governed by the courts and all plans must be approved by the courts and done with the best interest of the creditors in mind. In this case, restructuring and reorganization with a sale to a new party is likely the best chance at the creditors have or recovering their debts.

Right... besides, would their vendors be happier if their business with Niner just tapered off and ceased a few years from now? Sometimes you take a present loss to guarantee continued business in the future.

I am sure they will keep cracking under the pressure, Just like they always do.... As a former Niner Dealer, I am not shocked at all. Selling shit online below dealer cost for years. High failure rate, etc Niner was great as a frame only company. When the decided to be a bike company, is when the shit got shitty.... I used to own and love them, but they really are on my hate list now. Sorry

@NinerBikes: I think it's just that guy. Worked at a Niner Dealer for years and although there were some failures of frames brought into us, it was at a far less rate than that of a big bike brand we dealt as well. Difference is you guys always took care of and looked after your customers. I used to own and love your frames. Well, I still do, but I used to, too.

@cortosis2009: We started with Niner from the beginning.... Building beautiful custom frame builds and building Niner customers left and right, growing the 29er fan base. first ~5 years were good. Then, when NINER started to sell Complete BIKES and not frameset is where it got bad. The Niner rep was doing his job to try and make us stock complete bikes and at the same time we started to see the low low online pricing. And more and more of the bikes cracked or had EBB issues that were warrantied all the time, mostly... Some legit claims we had to fight like hell to take care of a customer. around 2015 we started to see people drive a long ways to get their Frame warrantied because they bought in online at Jenson or www whatever, And Niner sent them to our shop and expected us to do all the work for free. We took care of OUR customers. stopped selling them, With LOW margins and no new bike sales; because everyone got a new warranty frame. Business slowed and lots of other factors played in, but that shop is GONE, and it was a Damn good shop, and a community lost the most... rant over Niner is by far the worst brand I've dealt with in 15+ years in the business.

@MrDiamondDave: _ As a former shop owner myself, this 100% spot on. Niner deserves everything they are getting, cannot even remember how many times they screwed me over as a Dealer. I have several friends that have damaged frames, many with the rear triangles not aligned to the front, that Niner would not help at all. $9000 bike that you have to dish rear wheels all the time to get to fit them frame.

the local Colorado biking facebook page I follow was having a field day on this basically saying it screws the creditors that niner owes money to.
if someone who knows more about this cares to chime in, I would love an explanation.

@dualsuspensiondave: But doesn't Ch 11 still renegotiate the terms in favor of the debtor. The creditors are not going to be receiving what the Debtor signed up to, usually in decreased principal, interest rate, or increased terms. Seems unethical to me to file Ch 11 right before a sale, especially when they are claiming solvency... I'll wait to form judgement until Jan when all it becomes public.

@tgent: How is it unethical to refinance something? That's basically what it is. Finance companies are not ethical to begin with. Also, the buyer can take on all sorts of liabilities without the Chapter 11.

@dualsuspensiondave: Refinancing by filing Ch 11 the creditors (not necessarily finance companies) will be given new terms determined by the courts, like I said usually in favor of the debtor. I added that I feel it is unethical to file Ch 11 right before a sale to get better terms from creditors. If you're just filing Ch 11, ok, but during a sale is for the soul purpose to make the terms better for Niner's buyers.

I totally agree that finance companies aren't usually ethical to begin with, but that doesn't give debtors free reign to do whatever they want.

And also, like I said, this is all speculation, we don't know any details and I could be completely wrong, BUT the Ch 11's that I've seen are usually unfavorable to creditors.

@tgent: What is wrong with making the terms better for the buyers of the company? Perhaps without those renegotiated terms the solvency of the company would be in danger and the sale would not go through, and then what? Liquidation? That's even worse for the creditors. So yea, the creditors might take a hit here but thats part of the business they are in and the risk they take when they loan money to smaller businesses.

@dbhender: Chapter 11 is a mechanism to allow a debtor to deal with all of its creditors collectively. It allows everyone - niner as against its creditors and the creditors as amongst themselves - to get a little bit screwed in a consensual manner. A operating business like niner will have a lot of creditors - from secured creditors (who are protected from default by mortgage interests in niner's property) all the way through to trade creditors who provide goods on credit. If you are a creditor and you learn your debtor is in financial difficulty, your first reaction is to demand you are paid. This turns financial distress into bankruptcy. While this might seem like a good outcome for you (unlikely if there are secured creditors) its actually likely to be a case of cutting your nose off to spite your face because a bankrupt business is going to reduce your recovery to single digit cents in the dollar. This is the prisoners dilemma - we're all better off if we cooperate but how can I trust you to do so. Chapter 11 stops an individual creditor from pulling down the house to the detriment of all creditors. It is likely that the creditors will have to take a haircut on their debt, but a going concern preserved through Chapter 11 is likely a better outcome than a fire sale. That haircut will hurt some creditors more than others - small suppliers without default insurance, for example, will feel it more than large lenders who priced their loan at a level that compensated them for the risk of non-repayment. Depending on the nature of the debt, its possible that the original creditors have already sold their position to new creditors at a discount to face value. Distressed debt funds will buy up debt at a discount (and original lenders are often happy to sell to close out their exposure, even if it means taking a loss) and then leverage that position in the chapter 11 negotiations to make money. (You can get all moralistic about this last bit, but distressed debt (hedge) funds are almost invariably funded by money invested by your pension fund manager.) As a general rule, I tend to think people should pay their debts. Equally as a general rule, people should think carefully before lending money to people who might not be able to pay it back. Chapter 11 seems to me to be not a bad way of steering between these two general rules.

@Surlybyname: "Chapter 11 stops an individual creditor from pulling down the house to the detriment of all creditors. It is likely that the creditors will have to take a haircut on their debt, but a going concern preserved through Chapter 11 is likely a better outcome than a fire sale. That haircut will hurt some creditors more than others - small suppliers without default insurance, for example, will feel it more than large lenders who priced their loan at a level that compensated them for the risk of non-repayment."

"Through Chapter 11, as with other bankruptcy chapters, a debtor can also sell an asset free and clear of all liens either through a plan or through what is a called a 363 sale. The ability to sell an asset free and clear of liens can garner a greater sale price as purchasers are assured that the property is unencumbered and the purchaser is subject to less liability."

I guess what I mean is its protection a manner and that it is not complete absolution. It protects the company while it restructures in the fact that the rule of law will decide who gets paid and how much. Some creditors will not get paid (unsecured) or get very little. Not casting blame, they have to do what they need to do to survive. Just sucks for the unsecured creditors

""With a recapitalized balance sheet, the Debtor will be able to, among other things, hire the engineers and product managers necessary to design bikes for women, to begin offering kid’s models, to create electric mountain bikes, and continue to increase models with different wheel sizes. The Debtor also believes that by enlarging their omnichannel footprint they will be able to increase brand awareness and engagement, ultimately leading to substantial revenue growth.""

JUST STOP. You really think doing omnichannel better will make a difference? Or adding an E-bike or women/kid's specific bike to your lineup is going to help? The only thing on the above list that makes sense is wheel size. But that alone won't cut it. You guys are going to have to keep up with the joneses in terms of R&D being poured into their bikes: modern geos, stiffer/stronger frames, maybe some killer paint schemes, and if you really want to compete, provide builds at YT prices and play the value game. Everybody hates to be that guy but if you aren't careful someone else will do it and eat your lunch. Why let YT win? Beat them at that game will keeping you products up-to-date and you'll do fine. Otherwise you're headed right back to insolvency.

@fruitsd79: You made my point. All the bikes I looked at had long CS. I bought a Marin because it had the shortest, but still needed more money dumped into it.

If done right at a fair price, you'll have parents lined up. Why else have smaller companies doing right been able to flourish? All it would take is one of the bigger guys to leverage their manufacture to do the same thing while bringing the cost down.

A used XS 26 might work, but I tired and it didn't for my son- too stretched out so had to go with a 24'' bike.

Not until I saw this did it occur to me how much their market share I my area has shrunk over the last 5-6 years. They really have not been included in the conversation with the 'new school' 29ers, like Evil, Yeti, Trek, Specialized, etc. Maybe not the "first name in 29 inch wheels" any more.

They built some pretty decent bikes 5-6 years ago, problem is everyone else improved their bikes and geometry every couple years while niner just updated their build kits but still are stuck with 2011 geo

It seems that a lot of the criticism of this moves come from people who really don't understand what "filing for bankruptcy" means. It is not a sneaky move that someone pulls to get out of paying debts. It is asking for recognition from a neutral arbiter (the bankruptcy court) that one is, in fact, bankrupt. The filing also asks the neutral arbiter to decide how most fairly and with the least economic damage to move forward.

People and companies go bankrupt. It happens. Perhaps you can criticize them for poor management that got them in debt, but the bankruptcy filing itself is not unethical, it is just asking for recognition of a fact.

For those who can't understand how a company with more assets than debts can be bankrupt, here is a very simple scenario. They have a large debt payment due Monday morning at 9:00 am that they are contractually obligated to pay. They cannot sell enough assets by Monday morning to get the cash to make the payment. They ask the creditor to restructure the debt, so they can pay it later or more slowly, and the creditor says no. Now they are bankrupt. They go to a bankruptcy court who decides the best way to deal with the situation. The court could order all of the assets sold and the creditor paid with the proceeds, but that wouldn't get the creditor his payment by Monday morning; it would still be late. The court could look at the company and decide it is viable, allowing the company to continue to operate, and set up a payment schedule that actually gets the creditor his money, with interest, faster than selling the company's assets would. If you don't know the details of this situation, you can't judge.

Anyone who believes this will end well for existing owners and dealers need only look at what happened when GT/Schwinn did the exact same thing, as well as the fact that Competitive Cyclist has already started dumping 2018 Niner inventory at 20% off.

There's also the article on bicycle retailer news that has more info on the "assets" breakdown...

Steve Frothingham · Web Editor at Bicycle Retailer and Industry NewsMike, I'm tallying that up now. Assets include: $4.1M in inventory, $2.6M in machinery, $1.5M in receivables, $378K in pre-paid expenses, $362K in equipment, $215K in vehicles, $146K in IP (patents), $97K in cash or equivalent, $70k in property, and $260K in R&D. I'm not clear on how R&D is valued as an asset. Goodwill is not valued.

You need to consider Book Value of the assets not what is on the balance sheet. Additionally, while there are bad endings from Bankruptcy, there are lots of very good endings (Cannondale). This filing looks like Niner will only emerge stronger and with a balance sheet that allows investment in new products.

By my rough math based on the number of EE's stated above, $97K is barely enough to make the biweekly payroll. Hence the problem. $1.5M in receivables seems high as well...likely LBS's slow paying or not moving inventory.

Probably to limit debt liability of the buyer post sale and control the timing of payments pre sale. Basic cashflow management to keep them solvent through transition. Smart move for the team, bad move for the smaller creditors who will get in line for payment after. Capex is a good spin and saves face, but more likely to be cashflow management.

Could it have anything to do with limiting the previous company's commitments, both employment-wise and perhaps warranty-wise? Not a lawyer, so just taking a guess ... no malice intended, just thinking that this could be one of the other benefits of transacting in this way.

@tcmtnbikr: While we could shut down and liquidate our current assets. It would mean the loss of 31 cyclists jobs that work for Niner, loss of all warranty coverage for all current riders, loss of inventory value for our Local Bike Shops and International Dist, our business is currently grossing 15 million dollars a year and we support a whole host of other cycling related jobs and advocacy over the years. Taking on the investment and growing the company is a win in the right column. Also, I think you are premature on commenting on how we treat our creditors. We have always carried ourselves in an ethical manner.

@NinerBikes: I guess what people (at least me) are thrown off by is that you already have a sale set up and are still filing ch. 11. why doesn't the buyer buy niner with whatever debts and obligations exist? if it was chapter 11 just to keep afloat but remain independent, I think people would be less judgy.

@tcmtnbikr: If you had an accounting degree you wouldn't see that, because its simply not true. Those asset and liability #'s are likely book values or the company assets which could include anything from cash, to inventory, raw materials, work in process, accounts receivable, etc. The fair market value of those assets in a liquidation would likely not come anywhere near the listed book value of $9.8M.

@adrennan: Would you buy a business that's in this situation? The reason to restructure is likely because the debt payments are overwhelming to the business. They will likely restructure them to stretch them out and ease the current cash flow burden and make it easier for the operate in the near term.

There are a lot of reasons to do this, but the biggest one and the one that I suspect isn't really being told is to ensure that the buyer doesn't take on uncertain liabilities. While bankruptcy can be used for a LOT of different reasons, one of the most beneficial in a sale of a company is that the court can give a final order that allows a buyer to take free and clear of past liabilities. That doesn't necessarily mean restructuring existing debts to your suppliers and vendors (although that can be a common use of Chapter 11). It can also be used to stop uncertain liabilities. For example, if there were a bad batch of frames that were sold a few years ago its possible that the company could be sued for injuries caused by those failures all the way out to the statute of limitations. If you are buying a company, you don't want to have your investment dollars go to paying those former liabilities. The only way to ensure that you don't take on those potential risks is to have the sale approved free and clear of those liabilities by a bankruptcy court. If you try to just rely on general common law principles, you'll be facing your own bankruptcy case if you get sued down the line. Its a pretty common way to handle a business sale. I have NO idea if that's actually why Niner is using Chapter 11, but you could find out pretty quickly by looking at their bankruptcy schedules and filings.

@tcmtnbikr: @NinerBikes: Not if a lot of those assets are not cash or cash equivalents. Also creditors are afforded protections under a Chapter 11 filing. It doesn't take a law degree but clearly an accounting degree would help.

@NinerBikes: Chris this is sad news. I’m a happy owner and I can’t see any faults. In this market it’s the little guys who go out. Glad to see you’re working to a solution for you loyal employees and fans.

Good luck Chris; as a (much smaller) business owner myself, I can empathise fully and am glad to see someone else other than myself who has gone through the sale of a business trying to ensure that ultimately, all the stakeholders (creditors, employees, customers, partners, suppliers and so on) receive what they are owed.

Good man!

And honestly PB commenters, if you have never actually been involved in the sale or purchase of a business, really, really, you have to assume all your assumptions are probably wrong.

Hell, I've been involved in a few, and every time, I learn more and more.

Oh, and I don't have a carbon anything, just 26 inch rusty old steel or Ali.

@adrennan: There are plenty of businesses that are purchased out or bankruptcy or when they are struggling. Often time the products are good but they just need fresh capital or a better management team, etc. When you here the term "private equity" in investing this is what many of those firms are doing, just on a much larger scale. They buy out companies on the cheap, even out of bankruptcy like this, reorganize them, restructure them, and turn them around for big profits.

@sino428: We'll see. I've been on the creditor end in a situation the same as this and I ended up losing thousands. It was a different industry (production engine re-manufacturer), but same song and dance.

@orientdave: Well said. I'm a tiny business myself and just the thought of the admin and mental load involved in simply employing someone scares the shit out of me. Running this kind of operation takes a lot. Sugai seems like a decent enough guy, so I can imagine he's been tearing his hair out trying to do the best thing by everyone while staying afloat/growing the company. Maybe they have cost control issues, maybe their future plans are viable but expensive. This seems more like a capital increase to move onwards and upwards... Come on, this is the US, everyone f*cks everyone over in the wild wild west, this guy isn't one of the worst culprits until otherwise proven (and then we can unleash the hounds). Wow, empathy's fun!

@mintysauce: Not suprised the new owners want it done this way, reduces the debts at a few strokes of a pen. They still have to keep Shimano/ Sram/ fox sweet never mind who’s knocking out there frames so the hair cut will only be so tight.

@orientdave it’s just horrible to watch how people take high moral ground while having no clue what they are talking about. Moral Superiority team strikes again. I appreciate your well though out response hence I will limit myself to call them dickheads. It’s just hard not to feel for Chris and all the Niner team. All the best of luck @NinerBikes, sometimes Pinkbike comment board just looses it completely

@BenPea: Yes!! YES!! The mental load...... the responsibility that one feels because you employ other people is just something that you never really appreciate until it is you. There have been many, many more days that I have had to put my own welfare second to everyone else's than the other way round. It still scares me, but that is also the rewarding part of it; being responsible!!!. The sleepless nights have been plenty.

"Where does the debt go? (Written by a former Investment firm Mergers, Acquisitions, And Bankruptcy Specialist)

Chapter 11 is kindly referred to a restructuring. Mechanically it means that the creditors (Shimano, Sram, etc) will be repaid at least what they would received if Niner filed Chapter 7 (liquidation of assets). Simply put all of the creditors will receive only a portion of the debt that Niner contractually agreed to pay them when they ordered the products or borrowed money. Lets be clear that the bankruptcy court has to agree along with the creditors that the bankruptcy plan is fair or it could potentially go into Chapter 7 liquidation. Then there is no more Niner unless someone buys it outright for literal pennies on the dollar. Niner is not out of the wood yet.

The question is where does the debt go? Simply put, it lands on each and every one of us.

1. Niner Files for Chapter 11 to minimize its outstanding debts.2. Shimano as an example say takes a loss on (Example) $1 million and gets repaid $100K. 3. The additional $900K is assumed on the financial books at Shimano a financial loss know as a "Write Down."4. Shimano's write reduces their income for the quarter(s) they report the loss in which then reduces their overall income.5. Shimano pays less in taxes due to the lowering of their income. The saving in taxes is still only a portion of what their are owed.6. Shimano calculates their then loss into product price increases over time to recoup some of their losses.7. The loss in taxes paid to the IRS then reduces the amount the government can use for everything the government pays for such as roads, bridges, police, etc.8. The government operates off of tax income like a business so when they are nit receiving enough in taxes...they increase taxes.

This is the example of how Chris Sugai and Columbia Basin Partners are sticking it to each and every one of us. Chris's spin on keeping jobs in place will not only last for long but he sheds responsibility for running the company properly so they did not end up here. Columbia Basin Partners is getting a great deal by having Chris shed all of the debt before they acquire the company.

The likely future:If Niner does end up in Chapter 7 they will move forward after putting all of their dept on us one way or another. Downsizing will happen. Chris will be welcomed to leave within 2 years. At some point the company will likely sell to another brand like Dorel Sports. Either way you look at this, Niner has met its end as the we know it to be. Chris has also put his spin on how great this is when it is really a terrible thing.

Nice try but likely not at all how this works. Your main problem is considering SRAM, Shimano, and any other OEM suppliers to be the main creditors. I don't have any insight into Niners (or the suppliers) businesses, but I would doubt that these suppliers are extending that much "credit" to a company like Niner. Niner is most likely paying their suppliers and manufacturers on time without issue and don't owe them much more than say their most current invoices.

The "creditors" in this case are likely banks that Niner borrowed money from. These are not "little guys" getting screwed. They are financial institutions who are in the business of lending money, and part of that business is sometimes not getting repaid. Its a risk they take and its built into the price they charge (interest).

First I do take full responsibility for the situation we are in. I have been self-employed for the last 32 years and this is the toughest position I have found myself in. My deep love for all things bicycles drives me to complete this story with a happy ending. I am grateful every day to work with such amazing like-minded people at Niner.

While Your analysis is correct as to where the debt goes. The other side not presented is if Niner is successful after emerging from Ch 11 in Jan 2018. 1. All future profits the company makes will be taxed by the US government2. Payroll to our 31 employees will be taxed by the US government3. Parts and supplies we bring it will be charged duties by the US government4. Profits made by our suppliers (Shimano, Sram, Fedex, Visa, etc) selling us goods & services will be taxed.4. Profits made by Local Bike Shops selling our bikes will be taxed by the US government5. Money we donate each year to IMBA and other like-minded organizations benefits all riders

The American taxpayers are better off that companies like Harley Davidson & GM were able to reorganize under Ch 11. We hope to follow a similar path.

Thank you all for your comments both positive and negative. We will learn from our mistakes and improve.

@vjunior21: While some of your points are valid your being a little melodramatic. Niner is a relatively small company in the scheme of things. Where is the outrage for the HUNDREDS of oil companies that file chapter 11 to restructure their debt payments that are in the BILLIONS! 7.8 million is pennies compared to the companies that file chapter 11 regularly. Also, since they actually have more in assets I doubt they are going to get too much of a haircut on their debt. Especially your example of 1mil to 100k. Send me some of that stuff your using.

I also believe shimano, sram, etc are the smaller creditors and that most likely big banks that are charging higher interest rates, penalties etc.

But really get off your high horse. Niner has pry paid more in terms of taxes for roads etc than they will affect with this chapter 11. Not including giving a job to like minded cyclists like you and I.

All this is hearsay. Until the filing is complete no one knows will know the real truth.

Lots of bad information in this post. If the buyer wants to keep doing business as Niner, and they do, they can't stiff suppliers, customers, or bike shops. No one would buy the business to liquidate it. The creditors taking the hit are the lenders that charged an interest rate that Niner could not ultimately pay. This was the risk that both Niner and the banks took.

@NinerBikes: - No, Harley and GM should be out of business, it is not better. Other companies(that were run correctly) would of filled the gap. This does nothing but help YOU, quit trying to make it seem like you are helping everyone out.

@SLBIKES: That is very true, other companies would fill the gap. But what happens to the 80-100k employees of GM with families to feed etc at the time. They aren't going to immediately transition to other companies. WE should be mad at the big execs who caused this problem and lived a lavish lifestyle most likely before the filing.

What really sucks were the people who owned stock in GM individually. They got screwed. And the 20k or so employees that were laid off due to the restructuring. However whoever invests in the S&P500 is making profits as GM is up over 10 dollars since this time last year.

In the GM case though they had over 50% more debt than their assets/cash. So they pry got away with more debt reduction than in this case of Niner bikes. We are talking about 170bil debt to 80 billion assets. Ninerbikes is peanuts compared to this.

Do I think Niner bikes will succeed in the future? I probably don't think so and I hope they prove me wrong, but this will further extend an opportunity to remarket themselves and most likely in the future be sold to another investment firm that owns other bike companies like we have seen recently this year. Investment firms are killing sports though. Look at KSL who owns multiple ski resorts and all the drama at squaw valley(if your a skier/snowboarder you'll know what I am talking about).

Lets be honest guys, any bike company shutting there doors or going through any financial troubles is upsetting for anyone who loves the sport, period. I'd much rather see a fucking walmart shut down than any bike company out there.

There's obviously a shit load of information that we have no clue about regarding Niners finances and legal situation. I've gotta put up with moronic political opinions at work all damn day and cycling is my escape from it all. Lets save the dumb shit comments for meaningless "26 inch forever"

Wishing Niner, their employees, bike shops, and customers all the best. Keep making bad ass bikes!

Actual Chapter 11 attorney here, and one who owns a Niner. It's odd that people got downvoted for stating the obvious fact that companies use Chapter 11 to force changes to their contracts, including their debts. In Chapter 11, you can keep ("assume") your contracts, or get ride of ("reject") them, and the contract counterparty will be left with an unsecured claim against your estate (which is usually worth very little).

Someone's ox is getting gored in every bankruptcy--companies don't file bankruptcy if there's no benefit in it for them. It's not wild speculation to assume that here the parties taking a haircut will be suppliers and lenders. I don't think that makes Niner bad or immoral. The alternative is to take from employees or customers. Most courts won't confirm a Chapter 11 plan that allows the former owners to retain equity unless creditors are also repaid.

I have heard one of the greatest things Niner had to overcome was their lack of quality control... So many failed frames. Hopefully when they come around this next time they will have a better handle on their quality control. I would imagine once they have that in order, their numbers will go back up.

A few years ago people couldn't get enough 29ers in my area, and saw multiple Niner bikes at the trails and even shops carrying the brand. Now the market has changed and lots of competition with various flavors of 29ers, and I can't remember the last time I saw a Niner on the trail in my area.

You have to admit the Enduro type bike category is the gold standard these days for a bike co. Niner actually paved the road for the current popular enduro type bike geo with their WFO. It was made for several years and replaced with the 2017 Rip 9 that has very similar geo. All the bike names are using a very close geo in this category. The problem was that most people were used to the crappy geo on previous 29inch bikes (pre-WFO) thus writing off the possibility of a wagon wheeled bike shredding everything in it's way. All the tough guys gravitated toward 27.5 and since Niner didn't make one, they were essentially a non-contender. A side from a recent Single Tracks right up the brand was never pinned against the heavy hitters.

Just guesses but I assume while the assets are more than the liabilities. All the assets where not liquid and the liabilities from a cash flow perspective could not be covered by the assets. The chapter 11 will clean this up for the company to look attractive enough to be sold. I would assume some creditors would not get 100%. All guesses.

Good luck to the company in the future. Running a business is hard and difficulties do arise. Be nice people.to the CEO.. I am sure this is not where he saw things going. He is trying to do his best in a difficult situation.

Tough crowd here with many having no education as to actual bankruptcy proceedings. I’m not a fan of Niner bikes. But I’m just not a fan of that wheel size. If Niner is truly doing this in order to make sure it’s 31 employees keep their jobs, warranties still get honored, creditors can get paid back under restructuring and they get new owners that will invest money in new updates and products, what’s the big deal? Live and let live.

Chapter 11 Bankruptcy is also called "reorganization" bankruptcy. It means Niner is most likely struggling to keep the business afloat and to keep it alive filed for Chapter 11, reorganize with a new partner and hopefully be able to pay its creditors over time and help the employees keep their jobs as well. I should say that was a smart and responsible move by Chris Sugai.

Old Niner bikes keeps saying “31 cyclists will loose their jobs” yes thanks to the mismanagement and greed they will loose their jobs, OWN IT. We’d like to believe you are looking out for the “31 cyclists” and people you owe money to but I’d put my money on you looking out for you first. It’s just business, that’s what the big guy says to the little guy before he breaks it off.

What makes for a successful business is staying at the pointy end of the spear and keeping your business viable financially. While Niner was made popular as a company that decided to build only 29" wheel bikes at a time well past the introduction of 29" wheels when others had started to pave the way for their acceptance it was a good move on their part to get on that band wagon. They had a good run and developed a fan base and world wide distribution.

They were made aware of the advent of b+ in 2011 prior to its success and blew it off. Not saying that if they had taken initiative at that time it would have staved off their current Chapter 11 proceedings but going forward they perhaps should be more aware of that fact that instituting new developments is better than following the developments of others after the fact. I guess that leads to their interest in R&D but making kids bikes and e bikes part of the program only reeks of the Rip off & Duplicate aspect of it.

Speaking from some experience here....
Niner is drowning and looking for someone to bail them out. Investors come in and see that Niner is drowning and look at the debt they are going to have to assume which is a deal breaker. The suggest that Niner declare Chapter 11 to have all the existing creditors take the loss. You can imagine some factory in China taking the brunt of it. The bankruptcy court wipes the debt off and the new guys come in with a brand that needs some slick PR to tell future customers that everything will be alright. Hence this article.

@freestyIAM Yes, @NinerBikes and I are planning for some really cool bike expeditions, gravel races, training camps and record setting rides for 2018. They took a risk with me a few years ago and we're in it for the long haul. I couldn't be happier with the bikes and also the core values of the company. #Ninerd

Me either. I think it had to do with their marketing and lack of presence in good shops. I think they positioned themselves more as a boutique brand than a brand that everyone might want to ride. I can't recall seeing any of their bikes on the trail in the past 2 years. Marketing is really important these days especially given all the direct sales brands.

Niner is an interesting company. I've never ridden their bikes but the only place that sold them was was of the most fringe shops where I live. I really think they never marketed themselves well or got in to the right shops. The lack of growth to me is a reflection of their management, not their products. It is unfortunate that a company that really helped develop the genre of 29 is having business trouble during what could very well be called the 29er renaissance.

Im not surprised by this. Niner is a stale brand, built around a crappy name. Their bikes are un-interesting and their geometry sucks.
Let the market take its course. When this brand dies, better ones will fill its place.

And the PB comments section takes a slight turn from the standard "I took an engineering class once, so my opinion of product design should be treated as fact" to "I took an economics course class once, so my opinion on business proceedings should be treated as fact"

Good luck with the restructuring Niner. Hopefully it keeps the brand alive.

Regarding loss to debtors and creditors, its business, this kind of thing happens all the time. Some people get rich, some get hosed, some hose everyone in the process of either winning or loosing. Certainly not a new scenario in the bike industry.

Seems like we are in some kind of funny money, economic bubble of sorts, circa 1998-99 or 2005-6. Vid goes up and there's a new Tacoma in it. Everyone's like yea, got me one, standard issue around here! New 4 Runners and Tacoma's everywhere. They start at $25k, but no one buys that one, they go TRD, baby, $41K MSRP. What is going on here?

How many new bike companies launched in the last month? 3? 4? Cheapest model most sell is $5k, and that's considered a good deal.

In this context, hopefully Niner can actually produce a product that appeals to the masses and cranks up sales in the future, because it appears the MTB market is robust enough to support quite a bit of business.

Shame this happened but I'm surprised more bike makers haven't had trouble like this with the cost of most of these bikes now. Makes me wonder if the high costs are due to production and materials or greed to make more of a profit. Bring the cost for the bikes back down to a reasonable dollar amount. $5-8000 is far too much for any bicycle in my opinion. Last bike I purchased was a frame only and found great deals on parts, that's the only way to get an affordable quality bike nowadays.

I really hope the plan to pull out of the hole isn't "womens & kids bikes and E-bikes". Maybe make some more affordable bikes with modern geo, and maybe add some 27.5" bikes in the mix. The 29er thing is being done by everyone else now, and the niche is filled. Offering more to the core group of buyers is whats going to make a difference, not catering to kids.....

You'd have to be insane to be a Niner dealer. They break...often. They are almost as bad as the Cannondale road frames from the early 2000s (who remembers the yellow/red replacement frames--nothing like advertising your failure rate...)? Warranty work can kill small shops. And you can get stuck with their inventory because all of the big online dealers sell their frames and bikes at 35-50% discounts regularly. No brick and mortar can compete with that level of undercutting. As someone above pointed out, you can buy 2018 models at steep discounts already!!! With an eviscerating dealer base, uncertainty with the restructure, and competition from dealer direct (Canyon), I don't see this turning around. My money is on them becoming the new house brand for bikesdirect or similar...

Would you buy a house valued at $50k for $100k if it had $200k of debt associated with it just because you didn't want the 4 squatters to be evicted?

At the end of the day, no one wants to see their hard work go down the drain but with all the competition out there these days, will they still be viable moving forward?

Too much goodwill at play here, sometime you just have to look at letting it go. USA has some pretty weird rules. If you can't pay off your house in Australia, It will get sold and you will still have that debt for the rest of your life unless you go bankrupt......then you are royally screwed.

Soooo... was Niner ever at risk of going under? Or is this really just a way to work the system and screw creditors out of their rightful due?

If the sale was part of “saving” Niner from going completely broke and out of business, that’s one thing. But if it was simply a way to make the company more attractive for a buyer, while simultaneously lining Mr. Sugai’s pockets even further, then this is just a sh*tty, unethical move.

I hope it was the former and not the latter. Because if it was a case of trying to legitimately save the company, just be honest about it and you’ll get more customer goodwill.

We can't comment on payments to creditors while in Chatper 11, we do like the post below;

@sino428 I think some of you need to read up on what Chapter 11 means. The reason they are doing it before the sale is likely to restructure the liabilities, so that the debt payments are sustainable for the new owners going forward. Otherwise why would they buy the company?

This is also not a situation where creditors just get f*cked. When a company enters bankruptcy everything is governed by the courts and all plans must be approved by the courts and done with the best interest of the creditors in mind. In this case, restructuring and reorganization with a sale to a new party is likely the best chance at the creditors have or recovering their debts.

“It follows that it may be more economically efficient to allow a troubled company to continue running, cancel some of its debts, and give ownership of the newly reorganized company to the creditors whose debts were canceled. Alternatively, the business can be sold as a going concern with the net proceeds of the sale distributed to creditors ratably in accordance with statutory priorities. In this way, jobs may be saved, the (previously mismanaged) engine of profitability which is the business is maintained (presumably under better management) rather than being dismantled, and, as a proponent of a chapter 11 plan is required to demonstrate as a precursor to plan confirmation, the business's creditors end up with more money than they would in a Chapter 7 liquidation.”

Ok... I’ll admit that I had a very general perception of what Chapter 11 actually meant. Sounds like you’re doing it exactly the way it’s intended, and that current creditors may actually recoup all that they are due after the sale. Sounds like this is the way you save the business AND mitigate financial losses of current creditors.

@vjunior21: No "Chris" did not sign on debts, Niner, the company did. You have to separate the two. Chris is a person, Niner is the business entity that entered into these transactions.

He started a business and to do so he took on debt. This is a common practice and its done all the time. The lenders who lent him money did so knowing the risk and likely charged an appropriate amount for that capital based on their assessed risk. It sucks but it happens. The current Niner owners are not likely to make out very well on this sale.

Cool that employees remain by avoiding chapter 7, but bad for their creditors regardless of chapter 11 instead. Niner gets to keep assets with negotiated reduced debt and interest from it's creditors to be financially advantageous for the new owner to purchase. A trend like this could definitely hurt the smaller bike companies in the future with more stringent credit approval requirements.

To be fair, without access to their latest balance sheet and income statement, it is impossible for us to know whether they were headed into insolvency anyway (I assume they are privately held). If they were headed for insolvency (and they would be acutely aware of this fact), then this sale and restructuring their debt was a hail-mary that worked. I say hail-mary because obviously this buyer doesn't really know that the Niner brand is no longer what it used to be, and thus all this move really accomplished is to defer their inevitable demise.

Or perhaps (playing devils advocate to myself), the buyer has a great plan for resurrecting the Nner brand, and this move frees them up to invest in the R&D necessary to get them there. At a minimum, they should add support for 27.5+ for fuk;s sake, since technically they could still call it a "Niner", as it would fit both sized wheels.

I'm positive the owner will be leaving with cash in his pocket and his creditors will no be receiving 100% of what they are owed. While they will probably get more than a chapter 7, I still don't think they'll be made whole.

Nice work on being open and transparent Chris, I'm sure it's a stressful time in the office right now. You guys make great bikes and have some solid people working for you, glad to hear that won't be changing. Excited to see what the next few months bring, as a local it'd be really cool to see some growth!

Thanks for sharing, Pinkbike. I'm excited for the new direction and am hopeful about Niner Bikes turning over a new leaf. I have spent a few years on the bikes thus far and for anyone doubting the future, know that Niner is still behind me and their athletes. I am available to anyone who has questions about my personal experience with the brand. Cheers to a new future and being optimistic : ) 3 #pedaldamnit

Being such a strong IMBA supporter my not be something you want to bring up these days, @NinerBikes. Like me, I'm sure there are dozens of customers looking for a new bike for the 2018 race season. Any bike related dollar that leaves my pocket will be diverted away from any product or company that has any relationship to IMBA. STC, on the other hand - they have my full support. I suppose your lineup has more IMBA trail-friendly bikes these days than actual mtb trail-friendly bikes, so I get why you support them. The RLT is fast on those IMBA trails...

Four time Niner owner, one broken frame and they handled it immediately and I was riding ten days later. When you call, they answer. CVA is one of the best most underrated designs out there. I'm currently shopping for another Niner as they just work well. Best of luck to all!

@NinerBikes: I said some lame whiny comments before someone explained what ch 11 is all about. I feel like a bit of a tool/ jerk. I hope you guys get out of this! I am sorry. The internet can be a crappy place and I didn't make it any less.

Thanks @NinerBikes for being open and transparent during this transition. I'm personally excited for what the future may hold. While this is a trying time and not the path Chris Sugai planned for, it is a path forward to have more opportunity to grow and evolve. The outcome is not guaranteed, but risk = reward and most worthy things involve uncertainty and challenge. I'm committed to Niner because I love their bikes for endurance mountain biking and gravel riding. I'm also committed because they are good people who support the bike industry. #ninerd

@Gregorysmithj1: Because whats the other option? Liquidate the company? Thats certainly not good for the creditors as they will definitely take a bath. Chapter 11 does not discharge the companies debt. It restructures it most time to give the company a chance to recover, and thus pay back the debt. Could the sale and re-org fail? Yes, and the creditors will ultimately get screwed. But that's part of doing business and the risk lenders take. If they loan money to a business and that business fails, its sucks, but its part of the deal. No one did anything wrong, no one is a scumbag, it just didn't work out.

@thorsbane: You really need to stop the false information in this thread. You have no idea what you're talking about. Chapter 11 helps the creditors recoup their money, the exact opposite of what you are saying. They renegotiate a sustainable payment plan for the new buyers to take over. This is the best and most ethical way of handling the situation for everyone involved.

@sino428: Sounds like you know what your talking about and i don't. I think Niner really screwed up rolling this news out. It's okay to have bad times the press releases made them sound like they were running great and just using bankruptcy as an unethical way to rid debt. I think if they said "We hit some hard times but are being proactive to save our employees. Were bringing in new investors and declaring chapter 11 to help rebuild our finances." im still triggered with the ebikes though..

@Gregorysmithj1: I know it sounds counter intuitive but both things could be true. A company can be doing well operationally, but at the same time not be doing will financially because of debt and interest payments.

If you watch or read any financial news you often see the terms EBIT or EBITDA. What they stand for is Earnings Before Interest and Taxes (Depreciation & Amortization) and are sometimes more generally referred to as operational profit. For example a company like Niner could have a very good EBIT, which is essentially revenues less operating expenses. Meaning operationally their business is good. They are producing and selling their products and a healthy profit margin over what it costs to make them.

But at the same time they may have a lot of debt, which carries high interest payments or even principal coming due. So when you take it all the way down to actual net income, which takes into account the interest expense, you could have a company that is completely healthy operationally, be well in the red overall.

This is why a company that is going into bankruptcy could seem attractive to buyers. Often times the company is not going bankrupt because the products are not profitable, but because they are saddled with unsustainable debt payments.

@vjunior21: I'm sorry but you have no idea what you are talking about. Why do you think Niner had no intention to repay the debt? What the hell kind of business strategy is that?Explain to me how taking on debt with no intention of repaying it, and ultimately going into bankruptcy is beneficial to the company or the owners of the company? The owner is likely left with very little if any value after this transaction.

Lol... that amuses me greatly since Niner stole the suspension design from Balfa (its the 2-step FR), who conveniently ceased operations just as Niner was being founded, and Procycle (who owned them at the time) never bothered to protect Balfa's design IP.

@sino428: This is a sad truth, unfortunately. Entire countries do this very thing, defaulting on their debt, only to be lent money in the future by those ex-creditors! It works only because the creditors often repackage and sell the original debt to someone else, thus in actuality the pain is spread far and wide, In 2008, it was people's retirement funds that got hammered, while Goldman Sachs, one of the major perpetrators of the derivatives crisis was bailed out!

Think about it. If you loaned me $1,000 and defaulted and I paid you $1 back, but next year asked you for another $1,000, you would be stupid to accept. The fact that businesses DO doesn't make it right or beneficial, it's just the ugly side of capitalism that allows this behavior to actually make sense to the parties involved, but I guarantee you that someone is getting hurt in the process, as there "is no free lunch".

This is a valid comment. Going through chapter 11 will relieve Niner of certain debts owed to others. It is a quick way to prevent closing the doors but it still means someone is going to get screwed out of money that Niner owes them.

@dah96004: Not really. Chapter 11 helps the creditors recoup their money. If you know anything about finance at all, the creditors make extra money from payment defaults. When they are paid of course. The buyers will likely be able to pay the rates originally agreed to between Niner and the creditors instead of taking a double screwing from the finance companies involved.

@dualsuspensiondave: Yes, they can recoup money but they won't get all of it. If they had the money to pay their debts then Chapter 11 would be completely necessary. No thriving business that has the cashflow to pay their debts file for Chapter 11. It is a cop out.